The Aussie extended its losses, falling by 0.7% in the previous week. The slump was mainly driven by three factors.
Firstly, the April’s Labour Force Survey shows that there were surprisingly 30.6-thousand job losses instead of 20-thousand increase. Secondly, Premier of China, Li Keqiang, in a meeting warned that the continuous surging commodity prices would hurt the business, the price of commodities like copper and iron thus plummeted suddenly. Thirdly, the geopolitical tensions in the Middle East led to a flow of capital away from the risky assets like AUD.
All in all, the bulls were disappointed by the AUD and the selling pressure catalysed by the aforementioned factors pulled AUD to a lower level.
The gold has moved upwards for three weeks, climbing up by 2.07% again and returning to the highest point of this year. The bullish momentums of the gold came from three factors too.
The first one should be a weak dollar. The USD index has already broken below the significant psychological support at 90.00. Since the gold is denominated in USD, so its price became relatively stronger. Furthermore, the inflation is quite high and some of the commodities has refreshed a new high, more people thus invested in gold in order to hedge against inflation. Apart from that, cryptocurrency has become a more popular type of inflation hedge recently, but more funds flow back to gold due to recent bad news on the cryptocurrencies.
As a result, the gold became last week’s big winner under three positive catalysts.
IFO Business Climate Index of Germany
The May’s IFO business climate index of Germany is going to be released on the upcoming Tuesday (25 May, 2021).
As the largest economy in the Eurozone, Germany’s economic figure is useful to reflect the overall situation of the EU and it could cause huge impact on the euro.
The IFO business climate index is composite indicator compiled by the IFO Institute. It surveys more than 7,000 enterprises from various sectors, like manufacturing, construction, and retail sales. It is a leading indicator that measures current German business climate and expectations for the next six months.
Most investors are slightly positive on the outlook of both Germany and the whole EU thanks to its falling new COVID-19 cases and the high vaccination rate. The containment measures are gradually lifted and more economic activities could be recovered. As a result, the IFO business climate index of May is forecasted to keep improving, surging from 96.8 in April to 97.8.
It will be bullish to EUR if the figure suggests a better-than-expected outlook. The market would also predict that the ECB may tighten the monetary policy by contracting the bond purchase programme during its MPC meeting. In contrast, if it disappoints the market, the EUR may suffer from a pullback.
USD Index (D)
The greenback depreciated for another week, falling by almost 0.3% and eventually breaking below the significant psychological support at 90.00.
From technical perspective, both two-line MAs and the RSI are biased negative. There is a death cross formed by the two-line MAs on the daily chart and the RSI is lying between the range of 30 to 50.
Even though the indicators provide a pessimistic forecast, the breakout below the 90.00-support has just occurred and has no longer been confirmed, so it is likely to challenge the 90.00 again and it may oscillate around 89.65 and 90.00 in this week.
Support: 89.65, 89.30, 88.20
Resistance: 90.00, 91.35, 92.00
The gold performed extremely well in the previous week. It printed a green daily candlestick from Monday to Friday, finally soaring sharply by 2.07% in a week. The gold price is currently pulling back from the upper resistance of its uptrend channel.
In the technical aspect, the golden cross started at mid-April persists on the daily chart. Moreover, the candlesticks are confined very well within the uptrend channel. However, the RSI is lying slightly above the 70-interval.
As a result, it is highly possible that the uptrend will go on in longer run, but the current pullback may be extended for a while. The pullback may be resisted by the resistance at 1850.00 in the near future and then the gold can resume the trend soon.
Support: 1850.00, 1815.00, 1760.00
Resistance: 1965.00, 2075.00
Despite the fact that the oil price slumped sharply last week, the loonie continued to extend its gains by rallying 0.31%. It is the seventh consecutive weeks for the appreciation of CAD.
Technically, if we are looking at the daily chart, we can still observe the golden cross formed by two-line MAs since mid-April. On the 4-hour chart, the RSI was crossing the 50-mark from below in past few days. Both indicators suggest a continuation of the uptrend. Nevertheless, the price is currently touching 0.8300 which is the strong resistance level that has been tested several times in a month.
All in all, the loonie is going to test the 0.8300 resistance again this week, although the indicators still show a positive outlook, the uptrend can be continued only if it successfully broke out at 0.8300 in coming one or two weeks.
Support: 0.8150, 0.8070, 0.7900
Resistance: 0.8300, 0.8550, 0.9400
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